Taxation of Inheritances (IHT)

There is no exemption from inheritance tax or gifts tax on transfers between spouses as there is in the UK and France.

It is the donee or beneficiary who is chargeable to tax (not the Executors or Administrators).

Tax is calculated in relation to the total value of all legacies to each legatee or beneficiary. The total value of the estate is irrelevant. The more the estate is split up between close relatives, (especially young children) the lower the overall ‘estate rate’ of IHT

The rates of inheritance tax vary, depending on both degree of kinship between donor and donee and the net wealth of the donee. Children benefit from the most liberal tax-free allowances, dependent on age. For spouses and children, maximum tax rates range between 34 per cent and 40.8 per cent. For un-related beneficiaries, the maximum tax rates range between 68 per cent and 87.6 per cent.

Certain expenses are deductible from the legacy including expenses incurred in relation to the last illness and funeral expenses.

The law establishes various allowances which have the effect of reducing the value of the taxable legacy or the amount payable under the life insurance policy, as appropriate.


Please note: The information contained in these pages is given without charge and without responsibility. It is not a substitute for proper professional advice which we shall be happy to give if so instructed.